HSBC to merge Oman operation

HSBC will hold 51 per cent of the group, to be named HSBC Bank Oman. OIB is Oman’s fifth-largest bank, with the second-largest branch network in the country and gross assets of $3.2bn.

“It is rare to get the opportunity to create a bank of such scale in a key target market,” Simon Cooper, chief executive of HSBC Middle East and North Africa, said.

“The ability to grow organically in Oman is there, but it would take an awfully long time to get to the scale of Oman International Bank. I am not predicting job losses.”

Under the terms of the merger, HSBC will inject additional capital of up to $97.4m from internal resources into HSBC Oman, after which the lender’s local business will be merged with OIB.

HSBC will have management and board control of the new entity, but it will remain listed on the Oman bourse, said Mr Cooper. He declined to say whether the present chief executive of OIB would hold the same position in the new bank.

OIB has a market capitalisation of around $700m, according to Thomson Reuters data.

The deal is expected to complete in the second quarter, following regulatory and other approvals. Oman’s central bank approved the planned merger in March.

Investors say the deal will benefit OIB. “OIB had a gradual decline in lending, but with HSBC coming on board they can reverse the trend,” said Vickneswaran Gowribalan, an Oman-based portfolio manager.